Click here for Full Issue of EIR Volume 10, Number 15, April 19, 1983
The world needs a new
sea-level Panama Canal
by Carlos Wesley
85 feet by other locks to the Pacific Ocean.
"Crossroads of the world" and "funnel for the world's com­
merce" are the two slogans most commonly associated with
Panama. Some 40 ocean-going ships pass through the Pana­
ma Canal each day laden with the raw materials, semi-fin­
ished goods, and finished products that are the lifeblood of
the world's economy. That means that in a given year, some
There are three separate sets of steel and concrete locks
in the Panama Canal, of up to three chambers each. These
lock-chambers are the steps that raise a ship to cross Gatun
Lake and the smaller Miraflores Lake. Each chamber is 110
feet wide and 1,000 feet long, with massive lock-gates as high
14,000 ships, carrying over 160 million tons of cargo repre­
senting more than 4 percent of total world trade, go through
as an eight-story building. A ship going across the canal uses
some 52 million gallons of fresh water, all of which is fed by
the waterway. The canal is a marvel of American engineering
connecting the Orient with Europe and Africa, North Amer­
ica with the nations of western South America, and the United
States' own Eastern Seaboard with its West Coast.
Transit is not limited to the canal. The legendary Panama
Railroad, which carried the old Forty-Niners on their way to
the California Gold Rush, still has an important role, al­
though it is in disrepair. Panama is also playing a growing
role as a transshipment point for air cargo. Alaskan North
Slope oil is now reaching the eastern United States through a
just-completed pipeline across Panama.
But the funnel is getting clogged. Rail and air transit
through the isthmus may serve useful supplemental roles, but
they cannot replace IiIl inter-oceanic waterway. Maritime
gravity flow-there are no pumps--and then spilled into the
shipping is, and will remain, the most expeditious and eco-'
nomical way of moving goods. Yet for current world needs,
the present Panama Canal is in danger of outliving its
usefulness.
'The Big Ditch'
Completed by the United States in 1914 after 30 years of
work-including 20 years by the French, who failed to build
a sea-level canal before the Americans took over-the Pan­
ama Canal has been rightly called "the eighth wonder of the
world ." A ship literally "climbs" over the mountains as it
crosses the 43-mile wide isthmus to get from the Atlantic to
the Pacific Ocean. By means of locks, a ship is lifted from
the Atlantic Ocean 85 feet above sea level to Gatun Lake,
one of the largest man-made hikes in the world; travels across
the Continental Divide through the famous Culebra or Gail­
lard Cut-the digging of which meant the removal of more
than 280 million cubic yards of rock and earth; and is lowered
42
International
ocean.
A great enterprise
According to Fernando Manfredo, deputy administrator
of the Panama Canal Commission ( see interview, below),
unless certain improvements are soon undertaken, the present
canal will reach a point of saturation by 1995.Even if those
improvements are carried out, they will only add 10 years to
the canal's capacity for absorbing traffic.
But the Panama Canal could become a major bottleneck
much sooner than Manfredo estimates, since his projections
are based on current trends, which include a slowdown in
world trade. If world trade were to grow by only 1 percent a
year, shipping would exceed the canal's maximum capacity
long before Manfredo's most optimistic calculations. Even
today, it is not uncommon for ships to have to wait in line for
as long as five days to make the nine-hour passage through
the canal.
The Panama Canal has already outlived its usefulness for
about 8 percent of the world's ocean-going fleet. The "Big
Ditch" has become too small for more than 2,000 of the
world's vessels. Many of the oil-carrying supertankers and
other bulk carriers are as large as 250,000 tons. But the
maximum size ship that the canal can handle is 65,000 tons.
This also bars its use by U. S. Navy aircraft carriers of the
Enterprise class.
The present canal could easily be made useless by sabo­
tage. Terrorists could destroy or disable one or more of the
lock-gates, or the -dams that feed the water for the locks.
Sinking one or mQre vessels in the lock-chambers could
also incapacitate the canal.
EIR
April 19, 1983
© 1983 EIR News Service Inc. All Rights Reserved. Reproduction in whole or in part without permission strictly prohibited.
All the above considerations point to the need for a new
sea-level canal capable of handling some of the world's larg­
est ships. The present lock-canal was never conceived to be
the optimum solution for a passageway between the two
oceans. The lock system was designed as the most expedi­
tious way to make the canal operational in as short a period
of time as possible. The idea was to replace it with a sea­
level waterway as soon as practicable.
As early as 1929, the U.S. Congress authorized a study
of the feasibility of expanding the Panama Canal, and of
building a new canal through Nicaragua. Similar studies were
ordered in 1936 and 1939. Work was actually begun in 1940
to expand the current canal, but World War II brought exca­
vations to a halt. Because of the perceived need for a larger
and more easily defensible canal, Congress ordered further
studies. A study completed in 1947 concluded that the current
canal would begin to experience difficulties in handling the
world's commerce by no later than the 1960s-as it has in
fact-and recommended that a new canal be constructed.
In 1970, the Inter-Oceanic Canal Study Commission
(IOCS), which had been appointed by President Lyndon
Johnson in 1964, submitted a report comparing the advan­
tages of eight routes across the isthmus. One of the most
interesting aspects of this study, which was mostly conducted
by members of the U.S. Army Corps of Engineers, was that
it analyzed the feasibility of employing peaceful nuclear ex­
plosives ( PNE) for the excavations. This aspect of the study,
carried out by Lawrence Livermore Laboratories as a part of
" Project Plowshare" under President Eisenhower's Atoms
for Peace Program, concluded that on certain of the routes
under consideration-those away from population centers­
PNEs could be safely employed at a considerable savings of
time and money. The excavation period could be cut in half,
from 10 to 12 years by conventional methods, to 5 to 6 years
if PNEs were used, according to the commission's report.
The IOCS report rates the routes across Panama, or near
the Panama-Colombian border, as the most advantegeous
from the standpoint of political considerations, cost, ease of
construction, and distance to be saved in routingships. The
Nicaragua route, although it would take advantage of Lake
Nicaragua, would require more digging. The same holds true
for the River Atrato route in Colombia, and although in this
case the possibility of employing PNEs would make exca­
vations competitive with excavations by conventional means
through some of the isthmian routes where the use of PNEs
is not possible, the Atrato route would mean that a ship would
have to travel some 700 more miles than at present.
Had work on a new canal begun in the 1970s, the costs
of excavation, even by conventional methods, would not
have exceeded $3.5 billion, according to members of the
Corps of Engineers that worked on the study. This outlay
would have been recouped within 60 years of construction.
A contributory factor in delaying agreement on a new
treaty with Panama for a sea-level canal was the leaking of
EIR
April 19, 1983
the recommendations, out of context, for the use of PNEs.
This set off a wave of hysteria among Panamanians, who
were led to believe that they would be guinea pigs in experi­
ments with untested nuclear technologies.
A new accord with Panama was finally signed in 1977,
the Torrijos-Carter treaties. But by then the Carter adminis­
tration, fully committed to zero growth for the advanced
sector and genocide for the Third World (as exemplified by
the Global 2000 Report), was no longer interested in a great
enterprise such as a sea-level canal, which would serve as the
technological driver for development, not only of Panama
but of the whole region. That was exactly what occurred
when the current canal was built at the beginning of this
century.
The 1977 treaties include a clause preventing either the
United States and the Republic of Panama from undertaking
the construction of a new canal without the consent of the
other nation. This clause, in practice, limits Panama's' sov­
ereignty, since it denies Panama the right to undertake the
project with another partner, such as Japan, without U.S.
approval.
Japan wants new canal
The Japanese have shown a keen interest in the construc­
tion of a new canal, not only because Japan is, after the United
States, the second largest user of the current waterway-but
also because it perceives such a project as a catalyst for for
economic growth, to pull the world out of its current deep
recession. This is stated explicitly in the proposal for a Global
Infrastructure Fund for economic recovery made by Masaki
Nakajima, founding chairman of the Mitsubishi Research
Institute. Construction of a new Panama Canal and the 13
other "super projects" or "engineers' dreams," as the Global
Infrastructure Fund proposal terms them, "would lead to the
development of peaceful demand in the manufacturing in­
dustry as well as technological incentives in the advanced
countries in lieu of arms production. Also expected would be
the multiplier effects upon the national income and employ­
ment of many developing countries which would be recipi­
ents of the proposed projects."
At next month's Williamsburg economic summit, Japa­
nese Prime Minister Yasuhiro Nakasone may propose that
the industrialized countries, including the Soviet Union, join
in establishing the Global Infrastructure Fund. According to
Kyodo News Service, the prime minister will lay out a plan
that would generate $6 billion a year for the great enterprises.
Japan will propose that the United States and the Soviet
Union contribute I percent of their military budgets, and
Japan provide I percent of its export earnings, a figure much
larger than its military budget. The Mitsubishi infrastructural
projects include irrigation-hydroelectric projects in Africa
and India.
A co-thinker of Nakajima, Shigei Nagano, president of
Nippon Steel and the Japanese Chamber of Commerce, has
International
43
taken the lead in pushing for the building of a new sea-level
canal in Panama. Nagano's proposal is to construct the canal
Interview: Demetrio Vergara Stanziola
through Route 10 (see illustration).A few miles west of the
current waterway (the canal's traverse is actualy north-south,
not east-west), the site identified as optimum by the IOCS in
its 1970 report, although it is not suitable for the use of PNEs.
Nagano has worked so energetically for this project that the
'A new
Panamanian goverment honored him two years ago by nam­
ing a nearby hill after him.
State Department sabotage
Less successful have been his efforts to get the U.S.State
Department to give the go-ahead for the project.The official
line of the State Department is that all options should be
studied, not only a sea-level canal, but the construction of
pipelines, a new set of locks to handle larger ships, a rail line,
and a trans-isthmian highway-in short, anything to delay or
even prevent the construction of a sea-level canal. The Jap­
anese have been forced to agree to join a tripartite study
commission, with the United States and Panama, to analyze
all these "options," wasting valuable time that could better
be employed in conducting the feasibility studies and under­
taking the design of the new canal.
A propaganda campaign has been launched against the
sea-level canal enterprise, contending that it would be too
costly, that it would destroy the environment, that it would
result in fewer jobs than a lock canal, and that it would bring
about global ecological devastation by permitting species in
one ocean to migrate to the other.
The State Department formula has gained many impor­
tant adherents in Panama, as can be seen in the following
interview with Panama Canal Commission Deputy Admin­
istrator Manfredo. He is known to favor adding a new set of
locks to the present canal, the so-called Third Lock option.
There are other Panamanians who are keenly aware that
what they would be getting in the year 2000 (when the treaties
call for the present canal to be reverted to Panama) would be
a waterway on the verge of obsolescence.These people re­
alize that the time to start working on building a new canal is
now.
One such person is Demetrio Vergara Stanziola, a Pana­
manian engineer, who details a proposal for a new canal.
Veragara Stanziola's proposal is notable because he ap­
proaches the problem of building a new canal from the per­
spective of a great enterprise, a project that would improve
conditions for the whole of mankind. His proposal is also
unique in its design, because it eliminates the need for mas- sive tidal gates at the entrances of the sea-level canal.The
tidal gates are included in all the other proposals we are aware
of. They are designed to deal with the problems caused by
the significant differences in the tidal levels of the Pacific
Ocean, as compared to the Atlantic.
The following interview with Vergara Stanziola should
makes clear what constitutes a great enterprise.
44
International
canal would be
to strengthen the U. s.
Panamanian engineer Demetrio Vergara Stanziola has come
up with a novel design for a new sea-level canal through
Panama, capable of handling supertankers and other large­
scale vessels which cannot move through the present canal.
Vergara's design does away with the need for tidal gates,
and includes the proposal that much of the excavations be
done byfirstflooding the area, and then dredging it- "dredg­
ing the mountain." Although hydraulic dredging is somewhat
more costly than conventional excavation methods, Vergara
states in his book EI Canal a Nivel (The Sea-Level Canal)
that the extra expense is more than made up by the savings
realized in the disposal of spoils, which can be piped out.
This system of disposal consumes less energy and is more
efficient than haulage by either truck or rail, both of which
have a built-in inefficiency factor of 50 percent (on the return
trip, the conveyance is empty).
Our correspondent caught up with Vergara Stanziola in
Panama City on March 4. Excerpts from his interview follow.
Wesley: Can you tell us briefly, exactly what it is that you
are proposing?
Vergara Stanziola: It is a project for a sea-level canal across
Panama, which follows the approximate alignment of the so­
called Route 10.It will allow traffic-dispensing with tidal
gates, and virtually eliminating tidal currents-under condi­
tions of maximum security for inter-oceanic navigation, of
vessels of 250,000 tons or more, without interrruptions, locks,
or the need for convoys.
The complex of technologies that I propose be employed
in building the canal, which I call "dredging the mountain,"
will result in considerable savings of energy, and take full
advantage of hydraulic resources for the generation of elec­
tricity, and to establish huge reserves of potable water, the
"transparent petroleum" of the future.My methods will sig­
nificantly reduce costs, as compared to conventional meth­
ods, and also reduce the risks to human life during the period
of construction.
Wesley: Today, using the existing lock canal, it takes a ship
from 8 to 10 hours to make the crbssing from one ocean to
the other.How long will it take through a canal such as the
one you propose?
Vergara Stanziola: Around five hours.
Wesley: You are proposing a canal that can handle two
EIR
April 19, 1983
level canal will still be necessary, because the massive trans­
portation of products dictates it.Of course, we can see that
mineral products, petroleum, can be carried by pipelines, but
an essential link
and world trade'
that requires the use of a great deal of energy.
If you have an aquatic medium of sufficient capacity
available, the most expeditious and cheapest way of moving
goods is by steel over water, and that is the way of passing
the supertankers from one ocean to the other directly, from
the point of production. to the final destination, in one single
continuous process. The same applies to other minerals.The
vessels of up to 250,000 tons each, simultaneously, going in
opposite directions. The existing canal cannot handle that
kind of tonnage, which means that a significant portion of the
world's oceangoing fleet cannot use it.The urgent need for a
new canal has been made clear since at least 1970, when the
Inter-Oceanic Study Commission issued its report.In 1970,
it was estimated that the excavations would only cost about
$3. 5 billion; your proposal, I believe, would cost about $17
billion....
Vergara Stanziola: Between $14 and $15 billion if work
were to start by 1985.
Wesley: . .And how long will it take to complete the
construction?
Vergara Stanziola: The construction itself would take about
12 years, but you would need an additional two years for the
feasibility studies...
.
Wesley: Then why has work not begun, if we already knew
in 1970 that we could have built the thing for $3.5 billion,
and when even the $15 billion you talk about is not a great
deal when you distribute them over 12 to 14 years?
Vergara Stanziola: I believe that the Americans, apparent­
ly, are trying to gain time.First there was the problem that a
new treaty on the existing canal had to be agreed upon.That
was finally done in 1977, and through it they ensured that
any study on a new canal, be it a lock canal or a sea level one,
will have to be done in partnership with the United States.
Therefore, they known that they have that absolutely inviol­
able right, consecrated by the treaties, when they are ready.
They will get interested in the construction of a new canal
when the world situation presents that project as the way out
of some other, structural, problems.
other methods of transportation are complementary ones,
because we lack a sea-level canal, but if we had such a canal,
the other options would become irrelevant.
Wesley: You have said that this project will be the greatest
work of excavation that will be carried out in this century.
The Japanese have expressed a tremendous interest-they
are very interested in the building of a new inter-oceanic
canal.Do you believe that they would be the ideal partners
for a project of this type, bypassing in that way the perceived
negative attitude of the Americans toward the project, or can
an agreement be worked out between the three parties, Pan­
ama, the United States, and Japan to get construction
underway?
Vergara Stanziola: Rather, I believe that an understanding
on the future construction of a sea-level canal will have to be
reached between the United States, Japan, Panama, and other
major users. However, the United States will still want to
retain a significant and controlling role over the future sea­
level canal, because they consider it to be inextricably linked
to their inter-coastal-Atlantic coast, Pacific coast-trans­
portation needs, and it has always been among their major
concerns for their own national development.
Wesley: Most designs before yours have proposed to solve
the problem of the differences in the tides between the Atlan­
tic and the Pacific by means of tidal gates. Your design does
not include such gates; how do you get around that problem?
Vergara Stanziola: The solution that I have proposed is the
construction of massive breakwaters, which project about 10
miles .into the ocean from the Pacific coast, and a shorter
distance on the Atlantic side, because the depths of the At­
lantic are greater than the coastal and continental platform
depths of the Pacific...
The tidal intake, which is forcibly limited by this design,
expands within the artificial coves that are formed inside of
.
Wesley: Fernando Manfredo, Deputy Administrator of the
Panama Canal Commission, and officials of the government
of Panama and of the U.S.State Department have presented
a series of alternatives, such as a "dry canal," an overland
rail line or highway, pipelines, or even widening the existing
canal, or adding a new set of locks-the so-called "Panama­
nian alternative," proposed by the engineering firm of Lopez
and Moreno.In your view, are any of these alternatives more
feasible than a sea-level canal?
Vergara Stanziola: I believe that the construction of a sea-
EUR
April 19, 1983
these massive breakwaters, and projects itself in a fan-like
shape, loosing speed.It is a hy�aulic phenomena, which is
perfectly normal. The calculations of the velocity of the tide
is limited in this way to only the lenght of the canal and the
passageways to the coves themselves, which are about one
and a half kilometers in length.Ships would transit through
these entry ways, at their usual speeds, in about four or five
minutes.That is where the velocity of the tides would be at
International
45
-
The Route 10 .
canal proposal
From !be book El Canal a Nivel.
their maximum. FrQm there 'On in, the tidal velQcities de­
crease rapidly, until the entrance tQ the canal proper where
they WQuld practically be zero.
Wesley: AmQng the QbjectiQns vQiced by thQse whQ 'Oppose
a sea-level canal is that it WQuld lead tQ an eCQIQgical disaster,
as species from the Atlantic migrate tQ the Pacific, and vice­
versa, creating imbalances in the flQra and fauna. Does yQur
design include any means fQr aVQiding this problem?
Vergara Stanziola: ...AlthQugh I dQ nQt cQmpletely ex­
plain it, in my book I talk about an aquatic ecQIQgical cur­
tain-of sweet water-which CQuld CQme frQm the medium­
sized rivers 'Of the watershed arQund the canal. These WQuld
appreciably modify the salinity 'Of the canal prism.But, 'One
'Of the principal factQrs that we have tQ cQnsider regarding the
intrusiQn and interactiQn 'Of the'biQta from both oceans through
the canal, is the velQcity 'Of the currents.
AccQrding tQ my design, we WQuld have a canal with
practically nQ currents. The prQblem 'Of the currents is sQlved
46
InternatiQnal
by the artificial CQves established 'On the Atlantic and Pacific
CQasts. That means there will be little velQcity available fQr
the transit 'Of these animal and plant life, and much mQre
cQntrQI 'Over them. What's mQre, in the CQves themselves,
we will have the P'Otential fQr many 'Of these species tQ prolif­
erate, S'O that n'O 'One has tQ WQrry that they will emigrate
thrQugh the canal passage, �hich has a different level 'Of
salinity.
Wesley: AnQther 'One 'Of the Qbjecti'Ons tQ a sea level canal is
that it WQuld eliminate j'Obs, that it WQuld provide less jobs
than the current I'Ock canal.
Vergara Stanziola: . .. A canal that needs mQre peQpletQ
run it, is a less efficient canal. We must think 'Of efficient
enterprises. If we want tQ emplQy peQple, we must IQQk fQr
reSQurces, PQtentials 'Of 'Other types, and see tQ it that the sea­
level canal itself is accQmpanied by a series 'Of structures,
facilities, and installatiQns that WQuld allow f'Or the establish­
ment 'Of new industries in Panama. . . .This W'Ould generate
EUR
April 19, 1983
-
more employment than building another, more inefficient
lock-canal just because it would need eight thousand people
to run it.
Wesley: In your book you talk about the possibility that, for
example, the Japanese could establish great steel-making
complexes in Panama, as an example of the type of new
industries that could develop as a consequence of a new sea­
level canal.
Vergara Stanziola: The great iron ore deposits that are in
the South American continent are in Venezuela, in the Ori­
noco region, and in Carajas in Brazil, which has enonnous
deposits with an estimated value of $40 billion dollars.Ven­
ezuela also has bauxite, which is one of the essential raw
materials for modem techonology, for the making of alumi­
num, in the Caroni region.
Colombia has the famous Ceraj6n hill, which has an
immeasurable potential for coal production. All of these, to
get to the industrialized and industrializing nations of the Far
East, must necesarily go through the Panama Canal.
Japan has the need to import great quantities of these
materials to its own territory, to there transfonn them into
finished goods, which consume oil that is also imported. It is
obvious from an economic standpoint, that the establishment
of great iron foundries in Panama could, in a certain way,
complement the work of the large Japanese industries. Be­
cause, if you already have the steel manufactured in Panama,
they can make the finished goods that require a higher tech­
nology-automobiles, refrigeration components, and other
goods that you need for those basic products-at a lower
cost.
That is why I believe the Japanese are so interested in
establishing themselves in Panama.We have seen how [Shig­
ei] Nagano's group came with a large entourage of industri­
alists and businessmen to assess the possibilities of establish­
ing themselves in the industrial field. First, to develop, little
by little, the nucleus, to develop the skilled labor force, so
that in the future they can develop and expand those industries
that they will establish in Panama, initially as a kind of
Wesley: The Mitsubishi Research Institute has proposed a
series of "great enterprises" that in their estimation would
serve as science and technology drivers for the economic
development of all of mankind. Your book opens with the
following invocation: "I pray that You lift what for You
would only be a little slice of my land, if that would also
serve to bring humanity closer together." It seems to me that
your proposals fit into the concept of what Lyndon LaRouche
and Mitsubishi define as "Great Enterprises."
Vergara Stanziola: Yes, I conceive of this as a great enter­
prise....That is why I call upon the Lord's power to pour
his Spirit over this project, so that this endeavor will be taken
as seriously as possible, because it is one of the greatest
projects on earth, and it would bring more unity to all the
people of the world.
I do not mean that just because we have a more expedi­
tious way across the oceans, that humanity will come closer
together. But the effect on the universal spirit of all that a
project of this magnitude entails, will have incalculable re­
sults .. .. It will allow all the countries of the world to
communicate better, to strengthen their mutual economies,
their mutual trade, not with divisive spirits, ignoring the
limitations of particular systems and restrictive political and
economic theories. . . .
For Panama, the construction of this canal would mean.
in the first place, the invigoration of our economy.Besides
the future benefits that it would bring to humanity, it creates
an opportunity for the development of new technology on the
part of interested countries-be it the United States or Japan,
or other countries.
For the nations of Latin America, such as Venezuela, and
Brazil, it offers the opportunity of exporting their iron.Ven­
ezuela already manufactures tubing; it can export the tubing
needed for dredging through the mountains ....Colombia
can also sell part of its production.France, which provided
the steel and the tubes for the pipeline just built in Panama,
would also have an interest in selling, not only tubing, but
machinery for the construction of the new canal.
development foci.
Wesley: Any other reflections?
Wesley: You say that water is the "transparent petroleum of
Vergara Stanziola: I want to address the American people:
the future," a saleable natural resource that could be sold to,
They must take more of an interest in these projects that bear
directly on the shipping from coast to coast of their products.
They once had a President with vision, Theodore Roosevelt,
who did everything possible so that a canal through Panama
for example, Saudi Arabia.Could you expand on that idea?
Vergara Stanziola: Yes. If in the future, as things develop
and,routes get modified, when tankers bearing Saudi oil, be
they Saudi Arabian flagships or ships of a different flag, come
here, it is possible-if the scarcity of water, which is becom­
ing a crisis, continues to worsen-that those ships could carry
water from Panama as ballast on the return trip.That water
would be slightly contaminated, but they could store it, de­
cant it, and possibly use it as potable water.More likely, they
could use it for industry or for agricultural purposes. In the
future, having good water will have as much, if not more,
importance than oil.
EIR
April 19, 1983
would be built. Then, the American vision was clear and
aggressive.Today they have greater technology and financial
resources than they had then.... They should base their
decisions not only on momentary considerations, but they
must safeguard those interests that are more pennanent, that
affect their security and stability as the leader of the economy
of a large part of the world. And the Panama Canal is an
essential link to strengthen the United States economy and
security.
International
47
Interview: Fernando Manfredo
'In twenty years, old
canal won't suffice'
Fernando Manfredo. deputy director of the Panama Canal
Commission. is the chief Panamanian officer on the U. S.­
run commission. who will be overseeing day-to-day opera­
tions of the canal until it reverts to Panama in the year 2000.
Below are excerpts from an interview with EIR's Carlos
Wesley on March 2 which took place in Panama City.
Wesley: There has been much in the press lately about the
labor problems caused by the fact that American workers in
the canal get a higher pay than Panamanian workers.
Manfredo: In the old Canal Zone, the Panama Canal Com­
pany, the U. S. armed forces, and the Canal Zone government
paid salaries that were based on the salaries on the continental
United States. . . . It was the only case outside of the United
States proper where the American government paid salaries
that were tied to the prevailing wage scales in the United
States.
When the new treaties were negotiated and Panama re­
covered its jurisdiction, the United States decided that it no
longer had the obligation to keep the same wage scale. There­
fore, in the treaty itself, workers that were already on the
payroll were "grandfathered," but those that were to be hired
after Oct. 1, 1979 [when the treaties took effect] had to be
tied to a wage scale based on the Panamanian labor
market. . . .
The problem was taken up with the board of directors,
which at its most recent meeting decided to equalize the
salaries for certain levels within the organization, but not
because of the fact that there is discrimination-the Panama
Canal Commission does not accept that there is discrimina­
tion, nor does the United States government. They say that
there may be disparities, but no wage discrimination. Those
salaries that were upgraded were those where we found that
the commission is not competitive in the local market, not
attractive enough to keep the quality of worker that we need.
But all the rest of the employees are still pending, that is
the majority of new employees. . . .
Wesley: There was a lot of controversy generated because
the members were different from the current one .The Amer­
ican members of the board, of which there are five, and who
form the majority, could not reach a consensus, which meant
that the retention of the dual scale was not going to obtain a
majority of the votes. At that point, the president of the
board-who is also the representative of the U. S. Secretary
of Defense, and the head of the American representation­
invoked a provision from U. S. Law 970, which gives him
the right to exercise what is called the directed vote, to vote
in the name of all.
Wesley: The recent decision to raise tolls was not taken too
kindly by many of the nations at the southern end of the
hemisphere. They thought that Panama owed them some­
thing for the support they gave this country in getting the
United States to agree to a new treaty.
Manfredo: The tolls were raised in part to make up for the
loss of clients we suffered when many started using the oil
pipeline that was built across Panama. The loss of this busi­
ness, which means a loss of $50 million to $55 million a year,
meant that a toll increase was inevitable. However, we took
into account the fact that maritime trade today is going through
rough times, and we also took into account the effect a toll
increase would have on the economies of neighboring coun­
tries, particularly on Central America. .. .To compensate
for our losses, we should have raised tolls by almost 17
percent; instead we only raised them by 9 .8 percent; and
decided to make up the difference by cutting our costs.
Wesley: What are the long-term perspectives? What does
the canal commission foresee will happen between now and
the year 2000 in terms of new facilities?
Manfredo: It is difficult to make accurate predictions for
such a long period of time. But if transit continues to grow at
the current rates-some 14,000 ships are going through the
canal each year, and the rate of growth is very low, about 2
to 2.5 percent a year-we could expect that by the year 2005
we will have a completely saturated canal, even if we carry
out a plan to improve the canal, which is awaiting a final
decision, to widen Culebra Cut and the entrances to the canal.
If that program is not carried out, then we would reach the
saturation point much earlier, around 1995. It is very impor­
tant that by that point, when the canal would be virtually in
Panamanian hands, that the Republic of Panama should have
reached some decisions about whether it wants to continue to
participate in handling the growing volume of traffic, and in
what way: whether it wants to employ some other transpor­
tation techniques such as a sea-level canal, adding a third set
of locks to the existing canal, pipelines, a land bridge, or
some other means of transport across the isthmus.
the board had agreed to do away with the double scale, and
then later rescinded the decision.
Wesley: Are you saying that the canal will be obsolete by
the year 2oo5?
Manfredo: Not obsolete, saturated. Obsolete is when you
Manfredo: No, you
cannot use it. It will be used to its maximum capacity.
48
International
are
referring to a previous meeting where
EIR
April 19, 1983